Managed Care Consumer Protections Offered by Medium and Large Employers

November 1998

Background

During the past year, Congress and the states considered a number of proposals that would have provided additional protections to consumers in health insurance plans, particularly managed care plans. Among the key issues raised in these debates was how much the protections would increase health insurance premiums, which depends in part on the extent to which these proposed protections are already in place.

A survey of medium and large employers conducted earlier this year by the Kaiser Family Foundation and KPMG Peat Marwick finds that some medium and large employers say they already offer their employees the protections found in these proposals. This national survey of employers with 200 or more employees also finds that a majority of employers surveyed support a number of the proposed provisions, though that support does not extend to granting employees expanded rights to sue their health plans.

Protections Now Offered by Medium and Large Employers

The survey asked employers about whether they currently offer to employees a variety of the consumer protections considered in the policy debate, including:

Resolving employee disputes with health plans: 93% of employers report that they intervene to help employees resolve complaints with their health plans (7% do not). 67% of employers require health plans to provide for an internal mechanism for employees to appeal health plan decisions regarding denial of services or payment (25% do not), though many fewer (29%) require an appeals system that is external to the plan (61% do not). Employers report that they mediated an average of 6 complaints with health plans for every 100 covered employees in the last 12 months.

Emergency room care: A majority of employers (56%) require that health plans provide for a “prudent layperson” standard for emergency room care, which requires payment for emergency services when a patient reasonably believes that they need immediate medical attention even if the problem does not turn out to be serious (36% of employers do not).

Information provided to employees: 58% of employers provide written material that explains the mediation process available to employees who have complaints about their health plans (41% do not). 16% of employers provide data on the quality or performance of each plan offered to assist employees in their plan selection (78% do not)

Confidentiality of medical records: 89% of employers report that they require health plans to guarantee the confidentiality of employees’ medical records (7% do not). However, 30% of employers also report that they have access to medical records for case management or other similar situations (61% do not).

Views on Consumer Protection Legislation

Employers were also asked their views on several of the consumer protection measures considered by Congress and by many states:

Emergency room care: 65% report that their companies would support legislation requiring health plans to pay for emergency room visits when someone might reasonably believe they need immediate medical attention, even if the problem doesn’t turn out to be serious (26% oppose). Support is higher (74%) for those employers who offer only health maintenance organization (HMO) or point of service (POS) plans than for those that offer only conventional or preferred provider organization (PPO) plans (61%).

External appeals: 77% report support for legislation that would allow consumers to appeal a health plan’s decision to deny coverage for a particular medical treatment to an independent reviewer (17% oppose). Support is somewhat higher (83%) for employers that offer only HMO or POS plans than for those that offer only conventional or PPO plans (74%).

Right to sue: 53% say they would oppose legislation that would allow consumers to sue a health plan for malpractice, like they can now sue a doctor (28% support, 19% don’t know). Opposition is lower (42%) for those that offer only HMO or POS plans than for those that offer only conventional or PPO plans (60% opposition). During the Congressional debate over this issue, some business groups expressed concern that employers might also end up being sued in their role as health plan sponsors.

Conclusion

While the details of the consumer protections provided by larger employers may differ from the provisions of proposed legislation, it remains important to understand the extent to which certain employers in the private sector are acting to extend these protections on a voluntary basis. Where some protections are already in place in the private sector, there may be less need for legislative action, though the cost of imposing a legislative requirement might also be lower than expected. The survey of medium and large employers found that significant numbers offer a variety of consumer protections to their workers. It is important to note, however, that smaller employers–with less leverage over health plans–might not be as likely to provide consumer protection guarantees.

A majority of employers say they would support legislation to make it easier to get emergency room claims covered and to provide for an independent external appeal of health plan denials, though most also oppose expanding the rights of consumers to sue their health plans. Support for consumer protections is higher among employers that offer only HMO or POS plans than among those who offer only conventional or PPO plans.

Survey Methodology

The KPMG Peat Marwick survey was conducted between January and March of 1998 with 1,583 firms with 200 or more workers. The survey, which is conducted annually, focuses on the characteristics of the health benefit plans sponsored by employers. The supplemental questions discussed in this brief were developed jointly by staff from the Kaiser Family Foundation and KPMG and funded by the Foundation.